According to this story
AOL to buy The Huffington Post for $315 million
WASHINGTON/NEW YORK (Reuters) AOL Inc will buy Arianna Huffington’s influential website for $315 million, looking to the high-profile liberal pundit to rescue it from the dustbin of Internet history.
The move, announced Monday, comes at a hefty premium. AOL is estimated to be paying 32 times earnings before interest, taxes, depreciation and amortization for The Huffington Post, said Benchmark Co analyst Clayton Moran.
Similar content deals, such as Hellman & Friedman’s acquisition of Internet Brands in September 2010, typically go for eight to 12 times earnings, said Moran.
“AOL just spent 40 percent of their cash for very little near-term return,” said Moran.
AOL expects Huffington Post to generate around $10 million in profit before interest and taxes and see savings of around $20 million meaning it would be valued at around 10 times 2011 profits.
The Internet company’s name is still a proxy for expensive mergers gone wrong following the unraveling of its $350 billion merger with Time Warner Inc in 2000. Once worth $163 billion, today AOL has a market capitalization of around $2.3 billion. Shares fell 3.4 percent to close at $21.19 on Monday.
AOL’s management was eager to point out that there would be financial benefits from buying Huffington Post.
“One plus one will equal 11,” AOL Chief Executive Tim Armstrong said in an interview with The New York Times.
They’re asking for big trouble. There aren’t that many more liberals to mine, and conservatives along with most moderates will treat them as radioactive.
Must be that New Math.